Large and small companies are proving more adroit at harnessing
IT for competitive advantage, but mid-sized firms, especially in
manufacturing, are struggling, a
CBI report says today.
The report, sponsored by
Nominet, the UK internet
domain name registrar, shows that UK firms are starting to leverage
internet connections to find new customers and to stay close to
existing ones.
Jeremy Beale, head of knowledge content at the CBI, said most
firms have spent the past five years sorting out and integrating
their supply chains. "They have done the B2B bit, now they are
looking for the B2C bit," he said.
Beale said UK companies faced a more competitive marketplace as
a result of the internet. While it allowed them to seek new
customers offshore, it allowed foreign firms to attack their home
markets. "That is why they are having to move up the value chain,"
he said.
The report revealed little support from the IT industry for
this. It found only 14% of companies thought their suppliers'
R&D supported their business development 'extremely well' more
than 20% thought it supported their business 'a little' or 'not at
all'.
"The two most effective ways that suppliers' R&D could
better support customers' business development are through early
engagement and communication on service innovations, and greater
alignment with their customers' long-term strategy," the report
said.
Beale said IT suppliers needed to think in terms of services and
systems rather than boxes. "Services are not a hardware and
software issue," he said. "It's about relationships."
He said large firms and smaller companies had "got it" mid-range
firms have a problem. "Ironically they tend to outsource all the
value-creating activity, such as customer relationship management
and supply chain management but retain low value-creating
activities, such as day-to-day IT and networking," Beale said.
The report said 33% of chemicals and mining companies and 18% of
manufacturing companies indicated they would take IT and networking
in-house. This compares to 2% of financial services firms and 3% in
the public sector. Mid-cap companies were most likely to bring
outsourced IT and networking arrangements back in-house, as well as
being the least likely to outsource them.
"This could be a worrying development as our analysis suggests
that the mid-cap market should be an area of growth for improving
IT-enabled change in general, and outsourcing of IT and networking
in particular, in order to increase value-adding," the report
said.